The secret to successfully attract real estate investment growth the big dogs don't want to tell you.

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"Focus on what you want within an investment and watch your success grow."

Perhaps some of the best advice I have ever been given is to focus on what you want.  I know this is a laws of attraction type of comment, but it really, truly works. What I witness everyday are two types of investors: those who just know their investments will make money, and; those who consider each investment to be a nail biting experience.

The difference of course is how you think. When you know your investments will do well you are doing all the things needed to insure the investments will be great. If you need to down a bottle of antacids before making an investment decision,  you may be ignoring those pertinent details that make you a great investor.

Focus on the most important attribute of real estate

I know that everyone understands that location is the single most important aspect of real estate. That holds even more truth for the real estate investor. However, when looking deeper into what makes up the best location is what most people ignore. When you ask different investors what makes up a great location you will get hundreds of different responses. Things like:

  • Best school districts
  • High demand areas
  • Close proximity to jobs
  • Low crime areas
  • High and dry away from flooding possibilities

 

Indeed these are attributes of a great location. Home buyers looking to move their family into an area are indeed going to look for all these things. As a prudent investor who has aan exit strategy in place when buying the investment is served well with this mindset. BUT DOES IT STOP THERE?

Sustainable Locations

What seasoned investors know that many do not pause to consider is that location means something different to a home buyer than to an investor! To a home buyer the items listed above represents what is important to the home buyer. As an investor with a great exit strategy you may also want these things but the prudent investor knows it goes much deeper than this. What makes up a great location for a real estate investor should include aspects that will help to provide for sustainable returns while owning the investment. Things like...

1. Undervalued markets:

Markets where the average home buyer, buying a median priced home, can purchase that home for less than 33% of the area’s median home price (this is the national average). When the market is undervalued, you have a sustained growth potential for both home value appreciation and, in turn, cash flow.

2. Job growth:

When a market has job growth, it insures people can stay employed. These employed workers need a place to live and have a source of income to afford to pay your rent.

3. Population growth:

When a market has job growth, people move into the area to fill those jobs. They of course need housing which creates upward pressure on property values while also providing you with more tenants.

4. Job diversity:

If you want to insure the jobs and populations stay solid and or grow, it is imperative that the market has plenty of job diversity. We all know what happened when "Motor City" left Detroit. That city was most heavily dependent on the auto industry. When GM left, they took thousands of jobs and people with them. The city is just beginning its recovery (after all these years) from its economic losses and rapid reduction in population.

5. Sweet spot investing:

This is the area within the city that represents a housing price that an investor can buy and rent for cash flow while still providing for sustained property value appreciation. These attributes help to insure that an investment can sustain growth in both valuation and cash flow for the long term. When simply buying property in a great location the way a home buyer buys property often can leave you disappointed as it is missing that most important element that makes up a great location for the investor. (Sustainability).

Now please remember that your exit strategy should always be considered and identified when you make the purchase (You make your money going in). Most investors want to sell their property to the retail buyer who will pay retail price which insures you a good profit. To accomplish this you will want a house in a great location as illustrated on the top of the page.

 

 

THE BEST LOCATION HAS MANY ATTRIBUTES

As you can see the investor wants to incorporate all 5 of these attributes into his/her property buying diligence. While a home buyer buys a property to satisfy their emotional housing needs. An investor must buy property to satisfy their sustainable investment needs

 

Karin RosarneComment